Saturday, July 26, 2008

80/20 Rule - The Pareto's Principle

Italian Economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, making observations that 20% of the people owned 80% of the wealth.

After Pareto created his formula, many others realized that there were similar relations in their own areas of work. This led to Dr. Joseph Juran, who was known as a Quality Management pioneer to develop a universal principle he called the "vital few and trivial many". Dr. Juran was applying Pareto's observations about economics to a larger body of work.

Dr. Juran eventually came to what is known as the "vital few and trivial many", which is saying that 20 percent of something is always responsible for 80 percent of the results. This was developed based on Pareto's work in 1906 and eventually became known as Pareto's Principle or the 80/20 Rule. The 80/20 Rule means that in anything a few (20%) are Vital and many of them (80 percent) are Trivial.

The value of Pareto's Principle is that it reminds you to focus on the 20 percent that matters. Of the things you do during your day, it always works out that only 20 percent really matters. The 20 percent produces 80 percent of your results. Knowing this, it is absolutely imperative that one must identify and focus on those things. When errands/tasks start to stack up in your work/family/relationship setting, remind yourself of the 20 percent you need to focus on. If something in the schedule isn't going to get accomplished, do your best to make sure it's not part of that 20 percent.

Apply the Pareto Principle to all you do. Time and time again we see people spreading too thin trying to take on every task with the hopes of executing them on a high level.

As the saying goes; "If you try to be everything to everyone, you end up being nothing to no one".

The 80/20 Rule should be put on your fridge, on your computer, in your day timer or on the white board at work to provide yourself and those around you with a reminder to focus 80 percent of your time and energy on the 20 percent that is important and needs to get done.